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Capital Expenses

A capital expense is an improvement and/or special equipment added to a home or other capital expenditure that may be eligible if the primary purpose is medical care. An example might be constructing a ramp that allows for wheelchair access to a home.

What's Eligible?

First, you need a letter of medical necessity from your health care provider. You must have an appraisal of your home within one year prior to the installation and an appraisal after the installation to determine the value added to the home. The amount eligible is the difference between the cost of the expense and the increase in the additional value of your home. If the improvement/special equipment is used by individuals other than the person needing it for medical care, the eligible amount should be divided by the number of people using the item.

For assistance in calculating capital expense, use the Capital Expense Worksheet at the bottom of this page. If you have questions about eligible expenses, please contact customer service for a more detailed explanation.

For Example

A ramp is purchased for $3,000 and prior to installation your house is appraised at $100,000. After installation of the ramp your house is appraised for $101,000. The amount that is eligible from your account is $2,000.

Documentation You Need to Keep

Remember to keep all receipts and documentation for eligible health care expenses with your tax records. A Letter of Medical Necessity is required from your health care provider to be kept with your personal tax records--you can find a template at the bottom of this page.

 

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